Request for Clarification on Cross Charge vis-à-vis Input Service Distributor (‘ISD’)

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The Tax, Tariff and Regulatory Affairs Committee at AMCHAM made a representation to the Chairman of the Central Board of Indirect Taxes and Customs (CBIC) on 19th July 2022, seeking clarification on Cross Charge vis-à-vis Input Service Distributor (‘ISD’). In the recent past, AMCHAM members have been grappling with challenges on Cross Charge vis-à-vis ISD, and the widespread uncertainty regarding the relevance and consequent adoption of ISD mechanism. Intent behind the legislation and outcome is same in both methods (Cross Charge and ISD), i.e., to transfer GST to the State to which it pertains. Hence, a request for clarification, stating that cross charge is also a legitimate way to transfer the GST credit. This will avoid unnecessary litigation and burden on judiciary.